Singapore regains top spot in logistics performance: Logistics Performance Index 2012

It edges out Hong Kong in latest study
By Melissa Tan, The Straits Times, 31 May 2012

SINGAPORE has regained its crown in the World Bank's third and latest study of logistics performance, edging out Hong Kong by a razor-thin margin.

The Republic was No. 1 in 2007 in the first study, which measures how easily and cheaply goods can be moved through a country. But Singapore was trumped by Germany in the second study in 2010.

Mr Kelvin Wong, executive director of logistics at the Economic Development Board (EDB), said yesterday that some companies would locate their logistics operations in places like Hong Kong and Shanghai if their businesses are mainly in China. 'But for businesses where their market is truly the whole of Asia, then I think Singapore is the place (to be).'

Noting that the logistics industry is the backbone of the Singapore economy, Mr Wong said: 'We've always seen it as a key enabler as far as Singapore achieving manufacturing competitiveness is concerned.'

The sector made up 8 per cent of Singapore's output last year and employed nearly 205,000 workers, or around 6 per cent of the total workforce.

Singapore is a prime location for major logistics firms, with 20 of the top 25 global logistics players conducting operations here.

'With no natural calamities, Singapore's location is primed to be the only and true regional distribution centre for the region,' said a DB Schenker spokesman.

Noting that DB Schenker employs 1,600 workers, the spokesman said that number was growing by around 15 per cent every year on average. Singapore is DB Schenker's Asia-Pacific regional headquarters.

Mr Wong noted that Singapore has 'always had investments in its airport and seaport infrastructure' and works closely with the Customs authorities to shave the time taken to clear imports down to a 'matter of minutes'.

These were both factors that the World Bank looked at, along with the competence of transport companies, the ability of firms to track items and the prevalence of corruption.

Singapore fared less well in terms of the competence of transport companies and item tracking, coming in at sixth place for both.

Mr Wong noted there were many small 'micro-enterprises' comprising only a handful of employees, where productivity was very low, but said these would be helped by a $42 million five-year productivity roadmap for the industry announced in March.

Another challenge the logistics sector faces is talent, he added.

'There's a rise of intra-Asia trade flows... But Asia today is still fairly fragmented with many different stages of development and regulations.'

Logistics companies thus need to 'ramp up their expertise in handling the movements of all these supply chains throughout the whole region'. This calls for staff 'trained in many different Asian locations... and willing to understand the Customs and trade details and rules', Mr Wong said.

To stay on top, Singapore will further develop 'specialised capabilities' to build on its current strengths, particularly in logistics for the biomedical, oil and gas and aerospace sectors, he noted.

For instance, a $12 million Coolport@Changi facility was set up to store temperature-sensitive goods such as drugs.

The EDB is also working with companies in new areas such as improving sustainability and optimising the transport of goods within highly urbanised cities.

One example is a programme by DHL Express to 'improve the fuel efficiency of our delivery vehicles through active monitoring and management of driver behaviour', said Mr Herbert Vongpusanachai, managing director of DHL Express Singapore.

Said Mr Wong: 'In terms of pure volumes, Singapore will never be able to out-compete the major manufacturing centres of the world. By developing more specialised capabilities with higher barrier for entry, we'll create a stronger logistics industry in Singapore.'